Resilience a factor for Macquarie Group
Hot stock: Macquarie Group Limited (ASX:MQG)
Closing share price 7-6-16: $73.80
52-week high: $86.72
52-week Low: $58.28
Most recent dividend: 240c
Annual dividend yield: 5.44%
Macquarie Group has grown into a strong global financial institution.
Once known as an investment bank, its operations now span asset management, banking, corporate and asset finance, securities broking and investment banking.
The biggest contributor to both revenues and profits is the Macquarie Asset Management business, which now ranks as one of the top 50 asset managers globally, with nearly $500 billion in assets under management.
Macquarie has also grown to become a truly global business. Almost 70% of its income is derived from outside Australia, with more than half the staff based overseas.
Australia is the biggest region, contributing 32% of income, but the Americas are not far behind with 30%.
Like most financial institutions, Macquarie was hard hit by the GFC, but unlike competitors such as Babcock and Brown and Allco Finance Group it was sufficiently robust to weather the storm and has been steadily growing since.
The share price is yet to recover to the heady levels of 2007 when it was flirting with $100 but 2016 net profit exceeded the previous record set in 2008.
Earnings per share have been steadily growing since 2012 and are forecast to continue doing so for the next three years.
The forecast price earnings ratio is relatively low at 12 and the dividend yield is high at 5.6%, although it is only 40% franked due to the high percentage of profits generated overseas. Based on Skaffold's estimate of intrinsic value, the shares are trading at close to fair value with a steady increase in the value forecast.